Tesla posts USD-2bn annual loss, eyes further growth in 2018

Selling solar panels and EVs at the same location. Author: Mark Dixon.

February 8 (Renewables Now) - Tesla Inc (NASDAQ:TSLA) saw its 2017 net loss to common shareholders expand to almost USD 1.96 billion (EUR 1.6bn) from USD 674.9 million in 2016, even as revenues rose by 68%.

The electric vehicles and solar products maker reported on Wednesday a non-GAAP net loss to common shareholders of nearly USD 1.44 billion. “At some point in 2018, we expect to begin generating positive quarterly operating income on a sustained basis,” the company said.

The table contains more details on Tesla’s performance last year.

Results in USD million

2017

2016

Q4 2017

Q4 2016

Net loss to common shareholders

1,961.4

674.9

675.4

121.3

Non-GAAP net loss to common shareholders

1,436.9

413.6

513.1

106.6

Operating loss

1,632.1

667.3

598.1

266.7

Total revenue

11,758.8

7,000.1

3,288.3

2,284.6

- of which total automotive revenue

9,641.3

6,350.8

2,702.2

1,994.1

- of which energy generation & storage

1,116.3

181.4

298

131.4

Tesla said its rate of revenue growth in 2018 is expected to significantly top that in 2017, thanks to the planned ramp of both Model 3 and energy storage products.

AUTOMOTIVE DIVISION

The company continues to target a weekly Model 3 production rate of 2,500 by the end of March and 5,000 by the end of June. It said it will pursue its target of 25% gross margin for Model 3 after weekly production stabilises at 5,000 cars.

Model S and Model X deliveries are seen to reach 100,000 in 2018, constrained by the supply of cells with the old 18650 form factor. Tesla will continue to expand its sales network to new markets in 2018, after reaching 330 total store and service locations globally at the end of 2017.

Last year, combined orders for Model S and Model X “grew significantly”. Tesla initially faced concerns that Model 3 might hurt demand for Model S and Model X, but it now says the opposite may be true. There has been a notable increase in customer foot traffic in stores where Model 3 is on display, and orders for the other two models have gone up. There has been an even bigger increase in solar and Powerwall sales, the company noted.

The automotive division’s gross margin in the fourth quarter stood at 18.9%, down from 22.6% a year ago, but up from 18.3% a quarter ago.

“With demand outpacing production, we plan to optimize the options mix in order to maximize gross margin,” Tesla said.

The Supercharger network expanded by 338 new locations in 2017, for a total of 1,128 stations globally.

ENERGY AND STORAGE DIVISION

Tesla deployed 143 MWh of energy storage systems in the fourth quarter of 2017, up by 45% year-on-year, while solar system deployment was down by 20% quarter-on-quarter to 87 MW. Powerwall demand for home energy storage remains “exceptionally high”, and orders are consistently above production levels.

The 129-MWh energy storage project in South Australia will be recognised in the first quarter of 2018 based on commercial transfer of the site to the customer.

Solar volumes are down due to the company’s move to close certain sales channels and to focus on higher-margin projects. Solar deployments were also affected by the short supply of energy storage for customers who wanted solar-plus-Powerwall systems. “While volumes may continue to be impacted by these factors over the near-term, we expect growth to resume later this year,” Tesla said.

The good news is that the mix of residential solar sales for the company continues to shift towards cash and loan, accounting for 54% of residential sales in the fourth quarter, as compared to leasing. The cash and loan share a year ago was 25%. The shift is contributing to improved cash performance of the solar business.

The division’s gross margin plunged to 5.5% in the fourth quarter from 25.3% in the third, but improved from 2.7% at the end of 2016. The quarter-on-quarter drop was mainly a result of a combination of one-time factors and a higher mix of storage products. The typical seasonal decline in solar power generation led to lower lease revenue in the winter months. Tesla also booked one-time air freight costs for the South Australian battery project. It took write-downs related to legacy commercial and industrial projects that the firm had committed to before acquiring SolarCity.

The energy and storage gross margin is seen to “improve significantly” in 2018 thanks to greater operational and manufacturing cost efficiencies and the deployment of higher-quality commercial projects.